NYU Student Goes Undercover at Pegatron Factory, Offers Inside Look at iPhone Production

[I7guy]

Ah, another Apple-guided "opinion", formed by their PR & spin docters that flood the world with fruity propaganda. Paid by us, customers - and far more expensive than all Apple's donations combined.
So thank you for offering some return on that investment.
To fill the empty half that they leave out of the equation:
Yes, they stepped in, but their business model is intrinsically based on inequality that TC vocally refutes. When your hear Apple say "sustainable", they actually mean this business model.
And their tax behavior, being investigated, seems tax avoidance by Irish, but tax evasion by EU regs. Essentially activities are attributed to places where they don't happen, which is just as discutable as me walking out of an AppleStore paying $100 less for my iPad than you or anybody else. Or just stealing every 5th iDevice for that matter (...)
About moral obligations: I think as the largest corporation in the world, they should be an example, and beyond discussion. Instead of being another milkman, applauded by the uncritical that follow Apple framing and incomplete truths - rather than the bigger picture.
So this is the student's story: while they appear to be conformative, their existance remains based on social inequality and exploitation on an immense scale.
Thinking different - but essentially doing always the same.

Let's start with the labels. If my post is "another apple guided opinion, formed by the PR...etc", your posts are the polar opposite. I'll leave it to the reader to discern what label that may be.

As far as the rest of your posts, you are cherry picking what you don't like about apple and essentially applying some spin to it. As the largest corporation in the world, Apple has no more moral obligation than the second largest, the third largest etc. They are in the business to provide a service - Peter Drucker 101. It's all well and good that due to TC corporate philanthropy has been increased, the company is more active with human rights and social injustice etc, but that is not their business model. And it seems they are successful by all measures in "think different".

As far as taxes, Apple is under no legal obligation to pay more taxes than it has to. That the EU wants more and thus "apple is under investgation" is nonsense. Guilty until proven innocent.

If you don't like apple, maybe Samsung would suit you better. Their CEO is in jail and have been accused of numerous human rights violations. But they aren't the largest corporation and hence, according to you, have no moral obligation. But, they pay their taxes.

And I don't see you volunteering to fund a pay raise for these people in that factory. Apple is certainly active to ensure human rights are preserved in these factories, but they are under no obligation to pay more than the prevailing wage any more than General Motors in their factories to their UAW workers. The problem is stepping down from the "proverbial high horse", one would break their necks.

 

[TechGeek76]

??? How is he a loser exactly?

And that over 45 people up-voted that crap, especially when he started with it.

 

[ggibson913]

I worked in a factory right out of high school and it sucked. It actually motivated me to get an education so I could find and work a descent paying job which I did. Just one time, I would be interested to see the local workers spoken to about how they feel about their job, do they feel exploited? Do they feel like they are being treated terribly? The story is interesting but it seems to me that you can't really approach this from an NYU Grad student's perspective and come out with a fair assessment.

Oh yeah and put me in the camp of why do these folks always pick Apple? The iPhone is a relatively expensive phone and Apple has folks to monitor working conditions. What do you think the working conditions are in the cheap Smart phone factory? The Nike factory, or any other of dozens of factories?

 

[DJLAXL]

$450 seems like a lot to me. I worked for a med device company who transferred certain portions of their product to be assembled in Shenzhen. I remember the pay was 1635 RMB (~$250). Conditions sound the same as the facility we used - dorms, food, etc. Interesting read.

 

[ThunderSkunk]

Anybody here ever do a factory job? I have.

Yep. My first job was in an aluminum plant, the only employer hiring around the extremely rural area I grew up in. They knew it, and they exploited the hell out of this fact. Forget safety and environmental responsibility, it was the 80s, they paid their way out of that. You couldn't see from one end of the building to the otter with all the toxic aluminum dust in the air, there were hooks wizzing by on the ceiling-hung track that would drop down at head height and snag you as you worked under them and you'd scramble to get off them before getting dragged into the MEK Bath or the ovens, and the chemical fumes singed the sinuses and killed our ability to taste food for those years. It paid minimum wage, no benefits, your pay was docked for any perceived inefficiencies, losses, and supplies used, there were no bathroom breaks, about 5 min of training per position, a half hour unpaid lunch, and anyone arriving late twice was fired. Management was not kind, encouraging, or reasonable, as you can imagine. And the people who had been there long enough and still had some fingers left to work with talked about how good we had it compared to in the sixties. It was the only option any of us in the area had for any sort of employment at all, or we wouldn't have any been there.

When I hear rich Americans and their yuppie politicians take a break from stuffing cheeseburgers and booze into their faces to romanticize "the american worker" with some rosy defense of companies exploiting rural and impoverished populations, and then back it up with some idealistic BS about the nobility of self-determination and how hard work builds character and how they worked hard to get where they are, I think back to being 14 and stupidly buying into those same myopic ignorant ideas, vs the harsh reality I learned over the four next years it took to make and borrow enough money to get out of that hell. Everyone works hard.

Next up, your daily statement from the White House about how great it's going to be to put everyone back in coal mines and steel foundries, and try to prop up outdated dying industries because in the imaginary cartoon they live in, it's where the unwashed masses belong.

 

[Carnegie]

Estimated labour cost to assemble an iPhone is $5-10 (the whole phone costs about $210 to make -- yes not counting R&D and Timmy's expense account, but those have nothing to do with the cost of assembly labor anyway) . If you pay that worker 10 times as much ($4500 per month), you raise Apple's cost $45-90 per phone. That's all the cost of the phone would have to rise to pay a good American factory wage without touching Apple's profit. Even if Apple wants to make their fat margin on the increased labour, you're still looking at a $150 increase at the most.

And that ignores the fact that increasing automation because a lot more financially worthwhile when you're paying your workers $4500/month, so the cost wouldn't actually even need to increase as much was that.

I'm aware that various people have tried to estimate how much it costs Apple to make iPhones, but some of those estimates have been way off.

Apple doesn't report enough information for us to pin down precisely what it costs (on average) to make iPhones. But from what it does report we can get a ballpark. It's considerably more than $210; it's more like $350 to $400. And that ballpark is around what we might guess based on Foxconn's limited reporting as well. That doesn't include R&D and SG&A. It's just based on the cost of sales, which is what would be used to determine gross margins. Factoring in R&D and SG&A would yield operating margins.

As for what it would (additionally) cost to build iPhones in the U.S., your projections may well be in the ballpark. I doubt it would be as high as your upper limit. But there are other issues when it comes to the possibility of manufacturing iPhones (in great volume) in the U.S. which make it, for now, less feasible.

 

[s2mikey]

How about making the iPhone 8 $100 more costly, and using the money to pay for ethical manufacture instead of new features. Call it the "Human Rights" edition.

Bingo - or, better yet, maybe Apple can tell their obnoxious, never-happy shareholders to shut the !@#$ up and simply take a little less profit in order to pay wokers more. Yeah, that.

 

[akbarali.ch]

What a loser. This guy kicks back in his cushy middle class lifestyle, and he has the NERVE to judge what other people CHOOSE to do for a living?? How much money per month does he think that those workers were making on the farm? Huh? How productive were they there? Living in absolute poverty ridden destitution? And he has the nerve to criticize them, because he finds their work "very boring"??? And now he wants to get involved with "human rights advocacy"???

Let me guess: Shot in the dark. He wants these companies to pay their workers more. And when they're not willing or able to pay more, he'll tell the government to install a minimum wage, and price these kids out of a job. He'll FORCE them to NOT work at the rate that they thought was good for them; the rate they agreed to when they traveled from home to get the job in the first place.

These kids *think* that they'll be better off making money, instead of starving in rural China, but ohh noooo here comes the NYU intellectual to tell him alllll about how to live his life the way the intellectuals think he should live it, or else. Good think he was there to FORCE his idiotic opinions on others.

And by the way, that's about 40% of what I make in the U.S., I have all of Apples latest products, I pay my rent on time, and I save money, and their cost of living isn't nearly as high.

Maybe this kid should mind his business and shut up, instead of advocating for the violation of the rights that he claims to want to uphold. You don't have a RIGHT to INITIATE FORCE against anyone for ANY reason. Therefore, you don't have a right to tell people BY FORCE that they can't take a job, or that they can only take it under the terms that YOU prefer. Any claim to such a right is an absurd contradiction.

Very well replied.
Some people don't understand the relative improvement one gets. He is educated and well to do which gives him a lot more opportunity at hands, it is very obvious that he will find that job boring. But for workers in those factories, they may not have that many choices, they many not have much education or financial backing. For them, having a factory in their country is a great opportunity and it does improve their life and its a great support their family. I'm not saying its enough for them to buy an iPhone, but do you need one for survival?

 

[markcres]

You're not oppressing them right.

Don't be surprised when a massive rich corporation tries to maximise their profits by using cheap labour in a communist country that tramples on people's human rights. But this doesn't bother the fanboys who lust after the newest iToy.

 

[576316]

the iPhone 8 $100 more costly

Hahaha oh how innocent. The iPhone 8 will be a LOT more costly than just $100 more, all of which will go into Apple's pocket. It's expected to cost upwards of $1,500.

 

[ikramerica]

FYI, the labor laws in Italy are far, far, far, far, far more worker friendly than in China. Better than in the US too, in many respects.
[doublepost=1491945875][/doublepost]
Again, though, just FYI, the labor laws in Germany are exponentially better than in China (and, again, in many respects better than the US).

And yet when I took the Mercedes E-Klasse factory tour, the workers were not singing "hi ho" as they arrived for the afternoon shift. Most looked like they dreaded the day. And workers on the line weren't laughing and joking. Despite all the robotic assistance, they were still sweating and suffering in the "environmentally friendly" underlit and undercooled factory.

 

[coolspot18]

"Powerless"? Some workers only stay two weeks because there are better offers across the street.

The reason why this is and should be news is because few people care when Chinese workers feel dehumanized by dehumanizing and underpaid work. When a US student (who middle+ class readers will empathize with) experiences this, people listen, and attention can be drawn back towards the more typical China based worker.

These jobs are quite good because the workers from rural China are generally low skilled and poorly educated.

The cream of the crop in China (100's of millions of middle class Chinese) work in much better conditions.

 

[Bacillus]

Let's start with the labels. If my post is "another apple guided opinion, formed by the PR...etc", your posts are the polar opposite. I'll leave it to the reader to discern what label that may be.

As far as the rest of your posts, you are cherry picking what you don't like about apple and essentially applying some spin to it. As the largest corporation in the world, Apple has no more moral obligation than the second largest, the third largest etc. They are in the business to provide a service - Peter Drucker 101. It's all well and good that due to TC corporate philanthropy has been increased, the company is more active with human rights and social injustice etc, but that is not their business model. And it seems they are successful by all measures in "think different".

As far as taxes, Apple is under no legal obligation to pay more taxes than it has to. That the EU wants more and thus "apple is under investgation" is nonsense. Guilty until proven innocent.

If you don't like apple, maybe Samsung would suit you better. Their CEO is in jail and have been accused of numerous human rights violations. But they aren't the largest corporation and hence, according to you, have no moral obligation. But, they pay their taxes.

And I don't see you volunteering to fund a pay raise for these people in that factory. Apple is certainly active to ensure human rights are preserved in these factories, but they are under no obligation to pay more than the prevailing wage any more than General Motors in their factories to their UAW workers. The problem is stepping down from the "proverbial high horse", one would break their necks.

You're in repetitive mode, lowering standards to achieve a desired feelgood-effect

 

[BernyMac]

And who determines what is ethical?

Uh, social justice warriors, who else?!?!

 

[Bmoreguy03]

wow

 

[whiteonline]

It isn't Apple's job to raise wages across China, that is the job of the Chinese government. And while Apple is big, it isn't big enough to move wages in a company of 1.6 billion.

Zeng did some interesting reporting. Glad he did it. Fascinating stuff for us Apple fans. Though if you've been to any manufacturing facility and looked at assembly line work, yes it is pretty boring. But the security for iPhone 7 production and the confirmation that they start making its n August was interesting. Glad he is going to work on human rights issues, but I hope he focuses on government action. That is more productive than pressuring any one company.

I never said Apple needed to increase wages across China - especially since they're not Apple's employees. I was speaking of a problem in more general terms where investors place expectations that can't be met year after year ... or shall I say quarter after quarter, since that's about all the limit to their concern.

Point is that, as noted in a comment earlier, corporations (and investors) can afford to accept lower margins yet still be a great company. Once they get into the routine of squeezing every cent out of opex to satisfy investors, greatness tends to end.

Apple is not affected, yet, because they're making buckets of money. But look at the once-great and innovative corporations that have now become a vehicle for sustainment. Look at Dell. Arguably a great company early on, pushed efficiencies over innovation to satisfy investors and eventually became a joke. They go private and are able to produce the lauded new XPS line.

I'm not saying the concept of a public corporation is bad (obviously it's not if you look at the overall economy), I just think there's a balance to be had to satisfy personal gains while still serving the surrounding communities.

wow, that's much more than I was expecting to write...

 

[TallManNY]

I never said Apple needed to increase wages across China - especially since they're not Apple's employees. I was speaking of a problem in more general terms where investors place expectations that can't be met year after year ... or shall I say quarter after quarter, since that's about all the limit to their concern.

Point is that, as noted in a comment earlier, corporations (and investors) can afford to accept lower margins yet still be a great company. Once they get into the routine of squeezing every cent out of opex to satisfy investors, greatness tends to end.

Apple is not affected, yet, because they're making buckets of money. But look at the once-great and innovative corporations that have now become a vehicle for sustainment. Look at Dell. Arguably a great company early on, pushed efficiencies over innovation to satisfy investors and eventually became a joke. They go private and are able to produce the lauded new XPS line.

I'm not saying the concept of a public corporation is bad (obviously it's not if you look at the overall economy), I just think there's a balance to be had to satisfy personal gains while still serving the surrounding communities.

wow, that's much more than I was expecting to write...

Yeah, that is a lot. Stock market does a play a role. One lurking issue is that tech companies have gotten very used to paying folks in stock options. So tech companies really need their stock price to keep increasing. Otherwise they need more cash to pay employees. The death spiral of stock that drops, leading to high value employees leaving, to poor performance, to stock dropping, is very very real for many tech companies.

Now apple can take lower margins. But taking lower margins so that Foxconn or Pegatron get paid more (where the money would likely go to Foxconn and Pegatron executives and their shareholders but would not go to its lowest paid employees) is not a very good option, in my opinion.

 

[ArcaneDevice]

It's pathetic to see the sarcastic reaction comments being upvoted and the criticism of the guy who worked there. His role was to report on the experience and that's what he did.

For one he didn't sound like he was complaining that he was "too good" for the job or people or that his experience was any different than anyone else who worked there.

For anyone with a vague interest in Apple history (or you know, learning) I thought it was an interesting read. For those bothering to read the full interview and not just comment jerk-off to a quote in a news post, he mentions some specifics not brought up in previous reports about the manufacturing process.
[doublepost=1492013900][/doublepost]

Very well replied.
Some people don't understand the relative improvement one gets. He is educated and well to do which gives him a lot more opportunity at hands, it is very obvious that he will find that job boring. But for workers in those factories, they may not have that many choices, they many not have much education or financial backing. For them, having a factory in their country is a great opportunity and it does improve their life and its a great support their family. I'm not saying its enough for them to buy an iPhone, but do you need one for survival?

Maybe you should read the damn article and you'll see that's exactly what he said instead of agreeing with some moron on the internet who didn't bother either.

 

[gnasher729]

Same for milking the planets' rate earth and metals resources, via other firms, while selectively advertising solar projects.

Unlike what the name suggests, "rare earths" are not rare. They are quite common, actually. The problem is that extracting rare earths is a very dirty process - it's cheap to extract if you don't care about polluting the environment, and expensive if you do.

 

[citysnaps]

Thank you! Finally, some real analysis based on actual facts.

Those are not "facts" and do not square with stated margins.

 

[I7guy]

You're in repetitive mode, diverting to lower standards to achieve the desired feelgood-effect

Hmm. Pot kettle thing maybe? Continuing to post anti-Apple repetitive hyperbole can get you seemingly repetitive responses.

 

[DevNull0]

As for what it would (additionally) cost to build iPhones in the U.S., your projections may well be in the ballpark. I doubt it would be as high as your upper limit. But there are other issues when it comes to the possibility of manufacturing iPhones (in great volume) in the U.S. which make it, for now, less feasible.

Agreed, but the obvious answer to that is you don't start with your biggest product category. Start small (like they did with MP) and expand (which they aren't).

 

[SeattleMoose]

Ok I had to watch the video a second time because I failed to grasp the "human rights" violations. On second viewing, I am still befuddled. Can someone please explain how these workers "human rights" are being violated? Or is this just more SJW grandstanding?

 

[Z400Racer37]

Hope you dont mind z400.. i quoted you on Appleindider.. put a direct link to your post.

Not at all, thanks. Appreciate the share.

 

[macgabe]

He says cheap meals inside the factory were 5¥ - that's 70 cents. That's subsidised. That means Pegatron is paying for the food. Granted it is not completely free but it definitely is a perk and 70 cents would be a fairly insignificant amount even for someone earning $450/m.

Maybe the almost-free food and the free accommodation and no travel or clothing expense would explain why this "low-paying job" is so attractive to 18 year olds. Basically they can work hard, spend nothing and actually manage to save something. Might even explain how some of them have iPhones.

Funnily enough my first ever job as a student was a very similar job in terms of wages and overtime (my hours were a bit longer, often 13 hour days and it was usually 7 days a week), but free accommodation and food. Only difference it was half the minimum wage. It was in the US, I worked for 2 months, spent literally nothing, amassed a pile of cash, and then had an amazing 6 week holiday, before going back to college.